Ryan's medicare plan debate will affect 2012 elections - aarp bulletin

"These are all politically unattractive," Rother says, especially as the Republican leadership has drawn the line at any tax increase, including eliminating the Bush tax cuts for

the highest income groups. "But," Rother adds, "something does need to be done." MEDICARE AND THE LARGER HEALTH CARE SYSTEM More sweepingly, Rivlin and other analysts

believe Medicare should be viewed as part of a flawed health care system that needs to run more efficiently as a whole. Robert Reischauer, president of the Urban Institute and a former

director of the Congressional Budget Office, says to make Medicare more efficient "you have to change the system that provides health care for all of us. And that can't be done

simply by changes within Medicare." WHAT IS THE RYAN PLAN? * Converts Medicare to a voucher plan (or "premium support" system) in 2022. New beneficiaries would choose a

private health insurance plan from a government-run insurance exchange and receive a government subsidy paid directly to the insurance company toward the premium's cost. The first

subsidies would be based on estimates for average Medicare spending on each beneficiary in 2022, adjusted for health status, age and income. * Reduces government health care costs over time

by pegging the increases in the subsidy paid to each enrollee to the annual rate of inflation, which is much lower than the current rate of medical inflation. * Raises health care costs for

Medicare enrollees substantially over time because they would pay the difference — out of pocket — between the subsidy and the actual cost of the insurance premium. * Continues traditional

Medicare for people 55-plus and those with disabilities covered by Medicare before 2022 — but with reduced benefits compared to current law. Lets them switch to the new voucher plan in 2022.

Central to that idea is altering its payment system by rewarding doctors and other providers for the quality of care they give instead of, as now, for the number of procedures they perform.

This change — proposed for years by the Medicare Payment Advisory Commission, which advises Congress on Medicare financing — was written into the new health care law. The new law also sets

up an Independent Payment Advisory Board with the power to assess medical treatments and change reimbursements to health care providers to keep costs down. Republicans view the board as a

means of rationing health care and often represent it as the Democrats' only "solution" for curbing costs, although the law specifically prohibits rationing. The law aims to

slow the growth of Medicare costs by giving health care providers smaller annual payment increases, a measure estimated to save $500 billion over 10 years without cutting benefits. If that

happens — and Congress does not back down in the face of intense lobbying from providers — the Medicare trustees and Medicare's chief actuary, Richard Foster, predict a rosier future

for the program's long-term solvency. They also say Medicare will consume far less of the nation's income than it would otherwise. The new law "makes some very significant

[cost] reductions in the program, and the [current] debate seems to totally ignore that fact," says Reischauer. Similarly, he says, the Ryan plan includes "many of those things

that the Republicans argued against in the Affordable Care Act," such as health insurance exchanges. What of Ryan's contention that nothing in his plan would change Medicare for

people now over age 55? Not wholly true, experts say. In repealing the health care law, his plan would eliminate popular new Medicare benefits such as free health screenings and would no

longer close the gap in prescription drug coverage known as the doughnut hole. And over time, beneficiaries in traditional Medicare would see their premiums rise as fewer people remain in

that risk pool to share the costs of the program. THE POLITICAL TUG-OF-WAR CONTINUES In the end, Medicare's future inevitably comes down to politics rather than policy. Ryan's plan

"is just another battle in a 50-year war," says Jonathan Oberlander, professor of social medicine and health policy at the University of North Carolina, Chapel Hill, and a

historian of Medicare politics. "It's déjà vu all over again." Ever since Medicare became law in 1965, Democrats and Republicans have fought ideologically over its design —

with liberals favoring it as a government-run social insurance system and conservatives preferring a private insurance alternative. That's why the GOP stoked opposition among older

Americans to President Obama's health care law in 2010, just as the Democrats are now trying to put a match to Ryan's Medicare plan, which also has earned the wrath of a majority

of seniors, according to recent polls.